How do I sell my business?

Selling a business typically involves several stages: preparing your financials, getting a professional business valuation, engaging a business broker or going direct to buyers, negotiating a letter of intent (LOI), completing buyer due diligence, and closing the transaction. The most important step — and the one most sellers skip — is financial preparation. Cleaning up your books, normalizing your earnings, and organizing supporting documentation before going to market helps you negotiate from a position of strength, avoid purchase price reductions, and close faster. Ideally, you should start preparing 12 to 36 months before a planned sale.

When should I start preparing my financials before selling my business?

Ideally, 12 to 36 months before a planned sale. Buyers typically value a business based on the most recent twelve-month period, but they review the prior two to three years to understand what is normal, identify trends, and assess the sustainability of earnings. Starting early gives you time to clean up historical bookkeeping issues, normalize your results, document add-backs, and build a track record of consistent, deal-ready financials.

What causes business sales to fall apart after a letter of intent (LOI) is signed?

The most common causes are financial issues discovered during buyer due diligence: EBITDA changing under review, undocumented or rejected add-backs, unclear owner compensation, inconsistent monthly financials, personal expenses mixed into business accounts, and poorly supported working capital. These issues erode buyer confidence, lead to purchase price reductions, extend timelines, and cause deal fatigue.

How long does it take to sell a small business?

From listing to closing, selling a small business typically takes 6 to 12 months. However, the total timeline is longer when you factor in preparation. Financial preparation alone should ideally begin 12 to 36 months before a sale. Once a buyer is identified and an LOI is signed, the due diligence period typically takes 45 to 60 days.

What is the difference between SDE and EBITDA?

SDE (Seller's Discretionary Earnings) adds back the owner's total compensation to the bottom line and is used to value smaller, owner-operated businesses — typically those with less than $1 million in annual earnings. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) does not add back owner compensation and is the standard for larger businesses where a buyer expects professional management to run operations.

What is a Quality of Earnings (QoE) report?

A Quality of Earnings report is an independent financial analysis conducted during buyer due diligence. It verifies whether a business's reported earnings are accurate, sustainable, and repeatable. The analysis examines revenue quality, EBITDA normalization adjustments, working capital requirements, and financial trends. Sellers who understand the QoE process before going to market can address potential issues proactively and avoid surprises that lead to price reductions or failed deals.

What are add-backs in a business valuation?

Add-backs are expenses that are added back to your earnings when calculating SDE or adjusted EBITDA because they are not expected to continue after the sale. Common add-backs include the owner's salary and benefits, one-time or non-recurring expenses, personal expenses run through the business, and above-market rent paid to a related party. Every add-back must be clearly identified, quantified, and supported with documentation.

What does deal-ready mean when preparing to sell a business?

Deal-ready means your financials are structured so buyers can easily understand how the business makes money, verify your earnings, and rely on the numbers without repeated revisions during due diligence. This goes beyond having clean books. Deal-ready financials mean your EBITDA or SDE holds up under buyer adjustments, your historical numbers tie consistently, owner expenses are clearly identified, and working capital can be explained and supported.

How do I clean up my QuickBooks before selling my business?

Start by reconciling all bank accounts, credit cards, and loan accounts through the current month. Review your chart of accounts and merge or remove redundant categories. Reclassify personal expenses that have been mixed with business expenses. Clear out stale accounts receivable and payable entries. Ensure revenue is categorized consistently across all periods. Flag one-time or unusual transactions that will need explanation during due diligence.

Is ongoing bookkeeping enough to prepare for selling my business?

Ongoing bookkeeping alone is usually not enough. Standard bookkeeping focuses on compliance — reconciling accounts, categorizing transactions, and producing financial statements for tax filing. Selling a business requires financials that can withstand buyer scrutiny, answer detailed follow-up questions, and remain consistent throughout due diligence. This requires normalizing EBITDA or SDE, documenting add-backs, ensuring historical consistency, and preparing for the types of questions a buyer's transaction advisors will ask.

What is exit planning for a business owner?

Exit planning is the process of preparing your business — financially, operationally, and strategically — for an eventual ownership transition, whether that's a sale to a third party, a management buyout, or passing the business to family. Good exit planning starts years before a sale, not months. It involves getting your financials deal-ready, reducing owner dependence, building transferable systems, understanding your business's true value, and aligning the timing with your personal and financial goals.

Why isn't my CPA enough when preparing to sell my business?

CPAs play an essential role in tax planning and compliance, but their scope typically doesn't include preparing your financials for buyer due diligence. Selling a business requires a different perspective — one that focuses on how a buyer's transaction advisors will read your financials, what adjustments they'll make to your EBITDA, and whether your numbers will hold up under a Quality of Earnings analysis. This requires transaction advisory experience.

What services does Genki Solutions provide?

Genki Solutions provides bookkeeping and financial readiness services for small and mid-sized business owners, with a focus on preparing deal-ready financials for business sales and capital raises. Services include historical bookkeeping cleanup and catch-up, ongoing monthly bookkeeping, EBITDA and SDE normalization, add-back identification and documentation, QuickBooks Online setup and cleanup, and financial due diligence preparation.

What makes Genki Solutions different from other bookkeeping firms?

Most bookkeeping firms focus on compliance — keeping your books clean enough to file taxes. Genki Solutions focuses on financial readiness — preparing your books to withstand buyer due diligence. Before starting Genki Solutions, founder Seiji Ueda worked in transaction advisory and quality of earnings analysis, reviewing financials from a buyer's perspective. That experience means we know exactly what buyer teams look for, where deals break down, and how to structure your financials to protect your valuation.

Where is Genki Solutions located?

Genki Solutions is based in Walnut, California, in the San Gabriel Valley area of Greater Los Angeles. We work with clients both locally in Southern California and remotely across the United States.

The $9.2B Collapse Every Healthcare Practice Owner Should Know About

Mar 2

Written By Seiji Ueda

If you're a healthcare practice owner thinking about selling in the next few years, this story should be on your radar.

Steward Health Care was the biggest private for-profit hospital chain in the country. Then it collapsed — spectacularly — in what became the largest healthcare bankruptcy in decades. We're talking $9.2 billion in debt, 11 hospitals shut down, over 5,000 jobs lost, and a CEO who bought yachts while his hospitals ran out of basic medical supplies.

Why should you care? Because the same types of buyers involved in this mess — PE firms, DSOs, health systems — are the ones looking at practices like yours right now. Not every buyer operates this way, but understanding what can happen in healthcare M&A gives you a fuller picture of the landscape you're stepping into.

In this blog, I'm going to walk you through exactly what happened — how a private equity firm turned six struggling hospitals into a $9 billion disaster, how the money was extracted, what happened to patients and staff, and why it matters for anyone in healthcare thinking about a transaction.

Act 1: A Rescue That Wasn't (2010–2015)

In 2010, private equity firm Cerberus Capital Management acquired Caritas Christi Health Care, a struggling Catholic hospital system owned by the Archdiocese of Boston. Cerberus was the only bidder. It converted the nonprofit system to for-profit, rebranded it as Steward Health Care, and promised to invest in the facilities.¹

The deal required approval from Massachusetts Attorney General Martha Coakley, who conditioned it on capital investment commitments — including roughly $400 million in upgrades to the original six hospitals.² Between 2010 and 2020, the firm says nearly $900 million was invested in hospital infrastructure, technology, and personnel.³

But there was a problem underneath the surface. By the end of fiscal year 2014, Steward's equity was negative $185 million and total liabilities exceeded $1.4 billion.⁴ The investments were real, but so was the growing debt.

Act 2: The Sale-Leaseback (2016)

In September 2016 — shortly after Steward's five-year regulatory monitoring period with the state expired⁵ — Steward executed the transaction that would set the stage for everything that followed.

Steward partnered with Medical Properties Trust (MPT), a publicly traded real estate investment trust based in Birmingham, Alabama, on a $1.25 billion deal. Under this sale-leaseback structure, Steward sold the land and buildings of nine Massachusetts hospitals to MPT, then leased them back. MPT also made a $50 million equity investment in Steward.⁶

The mechanics were straightforward: Steward traded real estate ownership for a massive cash payout, but in return took on substantial ongoing rent obligations to MPT — obligations that would ultimately prove crushing.

Where did the cash go? At least $484 million of the proceeds were paid out as dividends to Cerberus investors and Steward's management team, including CEO Ralph de la Torre.⁷ This transaction occurred less than a year after the Massachusetts Attorney General's office released a report highlighting Steward's declining financial position.⁸

With MPT's capital and a commitment for $1 billion in future acquisitions, Steward went on a buying spree. It purchased 26 more hospitals in 2017 — including the IASIS Healthcare platform — growing from 11 hospitals to 37 across 10 states.⁹ The system was now enormous. It was also deeply leveraged.

Act 3: Cerberus Gets Out (2020)

By 2020, Steward was struggling financially and the COVID-19 pandemic was beginning. Rather than let Steward enter bankruptcy at that point, Cerberus orchestrated its exit.

MPT provided a $400 million cash infusion into Steward and loaned $335 million to a group of Steward physicians led by de la Torre, who used it to buy out Cerberus's position and become the new owners.¹⁰ Cerberus confirmed to the Boston Globe that its total profit was approximately $800 million on its original $246 million cash investment — more than tripling its money.¹¹

But the extraction didn't stop with Cerberus. Shortly after taking ownership, the new physician owners paid themselves $111 million in dividends.¹² De la Torre bought a $40 million yacht later that year.¹³

Cerberus was out. The hospitals, burdened with rent obligations, operational costs, and legacy debt from the expansion years, were left behind.¹⁴

Act 4: The Collapse (2023–2024)

After Cerberus departed, Steward's financial situation continued to deteriorate. Between May 2023 and early 2024, the system closed hospitals or cut critical service lines in Texas, Florida, and Massachusetts.¹⁵ In the six years leading up to bankruptcy, Steward had shuttered six hospitals, resulting in at least 2,650 layoffs and the elimination of obstetrics, behavioral health, and cancer care programs at others.¹⁶

In January 2024, MPT disclosed that Steward was $50 million behind in rent payments.¹⁷ Vendors sued for unpaid bills and began refusing to supply hospitals. Staffing shortages mounted. Patient care quality deteriorated.¹⁸

On May 6, 2024, Steward filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas.¹⁹ All of its hospitals were put up for sale.

The Human Toll

The numbers alone are staggering. After the bankruptcy filing, five more hospitals permanently closed and approximately 2,400 additional workers lost their jobs.²⁰ Two more hospitals temporarily paused services before reopening under new operators.²¹

Two closures hit Massachusetts especially hard: Carney Hospital in Dorchester, which served low-income, majority Black and Hispanic communities, and Nashoba Valley Medical Center, which served 17 suburban and rural towns. Both closed on August 31, 2024.²²

Inside the hospitals, conditions had become dire. Congressional testimony and investigative reporting by the Boston Globe's Spotlight team revealed that nurses were paying out of pocket for bereavement boxes for deceased newborns because vendors had been stiffed, hospital beds were collapsing under patients, and patients were dying in hallways due to understaffing.²³ The Globe's investigation identified 15 cases in which patients died after receiving care that fell below professionally accepted standards due to a lack of staff or supplies.²⁴

The CEO's Lifestyle

While his hospitals crumbled, CEO Ralph de la Torre built a personal fortune estimated at more than $250 million.²⁵ Investigations by CBS News, the Wall Street Journal, and the Boston Globe revealed he owned two luxury yachts (worth $40 million and $15 million), a $7 million Texas horse ranch, two corporate jets valued at roughly $33 million each, and a $7.2 million mansion in Dallas's exclusive Preston Hollow neighborhood.²⁶ He also reimbursed himself from Steward funds for a $100,000 personal charitable donation.²⁷

The Senate HELP Committee, chaired by Sen. Bernie Sanders, issued its first subpoena since 1981 to compel de la Torre's testimony.²⁸ He refused to appear. On September 25, 2024, the Senate voted unanimously to hold him in criminal contempt of Congress — the chamber's first such referral in over 50 years.²⁹ De la Torre resigned as CEO effective October 1, 2024.³⁰

In July 2025, Steward — now under new management — filed suit against de la Torre and three other former executives, alleging they defrauded the company of more than $245 million through self-enrichment schemes while the company was insolvent.³¹

Resolution

Through the bankruptcy process, 29 of Steward's hospitals across eight states were sold or transitioned to new operators in over a dozen separate transactions.³² A critical settlement was reached in September 2024: MPT forgave approximately $7.5 billion in outstanding lease obligations in exchange for Steward waiving its rights to pursue lawsuits against the REIT.³³

In Massachusetts, five hospitals were transferred to new operators — Boston Medical Center acquired St. Elizabeth's and Good Samaritan; Brown University Health took Saint Anne's and Morton Hospital; and Lawrence General Hospital acquired Holy Family Hospital.³⁴

The Chapter 11 plan was confirmed by U.S. Bankruptcy Judge Christopher M. Lopez following two days of trial and over 50 objections.³⁵

Why This Matters If You're a Practice Owner

If you've spent 15, 20, 25 years building a practice — hiring staff who feel like family, earning the trust of your patients, becoming a pillar in your community — you already know this isn't just a business. It's a legacy.

When it's time to sell, some owners want a clean exit. Cash the check, hand the keys over, move on to the next chapter. And there's nothing wrong with that.

But a lot of owners feel differently. They want to retire or move on, sure — but they also don't want the thing they spent their life building to get gutted the moment they walk away. They don't want their staff laid off, their patients shuffled around, and their practice stripped for parts.

The Steward story is what that looks like at scale. An investment firm bought hospitals, sold the real estate out from under them, loaded them with debt, extracted hundreds of millions in dividends, and left. The CEO enriched himself while hospitals ran out of basic medical supplies. Patients suffered. Staff lost their jobs. Communities lost access to care.

This mentality doesn't just exist at the hospital level. It shows up in dental DSOs, behavioral health roll-ups, med spa platforms, and every other corner of healthcare M&A.

That said — not every buyer operates this way. Plenty of acquirers genuinely invest in the practices they buy, retain staff, and grow the business over the long term. The landscape is not all bad.

But understanding what different buyers prioritize and what's happened in real-world transactions like Steward gives you a fuller picture. If what happens to your practice after a sale matters to you, it's worth understanding the landscape.

The Steward collapse has also accelerated broader awareness across healthcare M&A. Massachusetts passed new legislation in January 2025 to strengthen hospital oversight.³⁶ A December 2025 study published in the BMJ found that hospitals involved in REIT sale-leaseback transactions face significantly higher risks of bankruptcy or closure.³⁷ Federal legislators continue to push for transparency around private equity in healthcare.³⁸

The lesson isn't that every PE buyer is bad. It's that not every buyer is the same — and the more you understand about that, the better.

Sources

Harvard T.H. Chan School of Public Health, "Private equity's appetite for hospitals may put patients at risk," December 2024. Link
Cerberus Capital Management, "Cerberus Provides Additional Background Related to Steward Health Care," September 2024. Link
Cerberus Capital Management, "Cerberus Provides Additional Background Related to Steward Health Care," September 2024. Link
Private Equity Stakeholder Project, "The Pillaging of Steward Health Care," June 2024. Link
American Federation of Teachers, "How Private Equity Has Looted Our Hospitals," Fall 2024. Link
Cerberus Capital Management, "Steward Receives $1.25 Billion Investment from Medical Properties Trust," September 2016. Link
Private Equity Stakeholder Project, "The Pillaging of Steward Health Care," June 2024. Link
Private Equity Stakeholder Project, "The Pillaging of Steward Health Care," June 2024. Link
CoStar News, "REIT Tells Steward Health To Pay Rent or Leave," 2024. Link
Private Equity Stakeholder Project, "The Pillaging of Steward Health Care," June 2024. Link
The Boston Globe, "Cerberus's Steward Health Care investment netted $800 million," April 2024. Link
The Boston Globe Spotlight Team, "Steward Health a cautionary tale in private equity's push into health care," September 2024. Link
Private Equity Stakeholder Project, "The Pillaging of Steward Health Care," June 2024. Link
American Federation of Teachers, "How Private Equity Has Looted Our Hospitals," Fall 2024. Link
American Federation of Teachers, "How Private Equity Has Looted Our Hospitals," Fall 2024. Link
Private Equity Stakeholder Project, "Steward Health Care's bankruptcy: one year later," August 2025. Link
American Federation of Teachers, "How Private Equity Has Looted Our Hospitals," Fall 2024. Link
American Federation of Teachers, "How Private Equity Has Looted Our Hospitals," Fall 2024. Link
Massachusetts Medical Society, "Steward Health Care Bankruptcy: What Physicians Need to Know," May 2024. Link
Private Equity Stakeholder Project, "Steward Health Care's bankruptcy: one year later," August 2025. Link
Private Equity Stakeholder Project, "Steward Health Care's bankruptcy: one year later," August 2025. Link
Mass.gov, "Steward Health Care transitions," 2024. Link
PBS NewsHour, "Investigation reveals how investors made millions as Steward Health Care system collapsed," September 2024. Link
PBS NewsHour, "Investigation reveals how investors made millions as Steward Health Care system collapsed," September 2024. Link
MHA Online, "Steward Health Bankruptcy & CEO Charged With Contempt," April 2025. Link
CBS News, "Senate votes to hold Steward Health Care CEO Ralph de la Torre in contempt," September 2024. Link; The Nation, "Ralph de la Torre: The Making of a Healthcare Oligarch," August 2025. Link
The Nation, "Ralph de la Torre: The Making of a Healthcare Oligarch," August 2025. Link
Senator Edward J. Markey, "Markey Pushes Justice Department to Act on Former Steward CEO Criminal Contempt Referral," September 2025. Link
Senator Edward J. Markey, "Markey Pushes Justice Department to Act on Former Steward CEO Criminal Contempt Referral," September 2025. Link
Fierce Healthcare, "Steward CEO resigns, files lawsuit against Senate HELP Committee," October 2024. Link
CBS News, "Steward Health Care claims former executives' 'greed and bad faith misconduct' led to hospital chain's bankruptcy," July 2025. Link
Weil, Gotshal & Manges LLP, "Weil Secures Confirmation of Steward Health Care System's Chapter 11 Plan," 2025. Link
Healthcare Dive, "Steward inks deal to slash debt, keep most remaining hospitals open," September 2024. Link
Mass.gov, "Steward Health Care transitions," 2024. Link
Weil, Gotshal & Manges LLP, "Weil Secures Confirmation of Steward Health Care System's Chapter 11 Plan," 2025. Link
Healthcare Dive, "After Steward crisis, new Massachusetts law aims to strengthen oversight of hospitals," January 2025. Link
Becker's Hospital Review, "Hospital sale-leasebacks linked to higher closure risk: Study," December 2025. Link
The American Prospect, "Reversing Private Equity's Looting of Hospitals," February 2024. Link

Seiji Ueda